Technical Outlook: Sterling is trading within the confines of an ascending pitchfork formation extending off the yearly lows and heading into tomorrow’s UK Consumer Price Index (CPI) the focus remains weighted to the topside while above 1.3155. This level is defined by the 50% retracement of the advance of the August low & the lower median line parallel and we’ll reserve this threshold as our near-term bullish invalidation level. 

Chart Created Using TradingView 

Interim resistance stands at 1.3372 backed by confluence resistance into 1.3465 where the 100% extension converges on the ML. More significant resistance stands at 1.3534/49. From a trading standpoint, I would be looking to fade sterling weakness heading into the release with a breach / close above the ML needed to validate the next leg higher in the pound.

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  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net shortGBPUSD- the ratio stands at -1.21 (45% of traders are long)- weak bullish reading
  • Long positions are 1.6% lower than yesterday but 1.5% above levels seen last week while Short positions are 7.2% higher than yesterday (unch on the week)
  • Open interest is 3.0% higher than yesterday and 3.5% above its monthly average.
  • The trading crowd has grown further net-short from yesterday but moderated since last week. The combination of current sentiment and recent changes gives a mixed near-term trading bias.

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